After TC Heartland tightened up patent venue, Judge Albright’s local patent rules drew plaintiffs wanting a quick courtroom shootout. According to Lex Machina and IP Law360, Judge Albright, by himself, picked up 793 patent litigations last year in the Western District of Texas (WDTex). In just a year, Judge Albright accumulated 20 percent of newly-filed patent litigations nationwide. A recent case shows, though, that not every plaintiff who wants to litigate in West Texas is entitled to stay there. Pleading key venue facts “on information and belief” will weaken an attempt to hold venue. Bootstrapping via pendent non-patent claims is also insufficient. Defendants who apply exacting TC Heartland analysis can prevail, and get a case dismissed outright for improper venue.
Plaintiff Akurate Dynamics LLC (Akurate) alleged, on information and belief, that defendant Carlisle Fluid Technologies, Inc. (Carlisle) infringed Akurate’s patent by conducting a product demonstration within WDTex. Akurate alleged not only patent infringement, but also breach of federal and Texas trade secrets statutes, plus breach of contract arising out of a nondisclosure agreement. The technology involved “spraying machines.”
Carlisle did not have any boots on the ground in the district. No facts were alleged to satisfy the primary TC Heartland qualification for venue: “the judicial district where the defendant resides.” The court noted that Carlisle lacked any “facilities or employees in the Western District of Texas.” Lacking those, the court moved on to the alternative TC Heartland test.
The alternative test requires that the district sued in be “where the defendant [both] has committed acts of infringement and has a regular and established place of business” (emphasis added). As to the first requirement, Judge Albright’s extensive experience as a patent litigator triggered his noting – twice – that the key alleged act of infringement was pleaded on information and belief. He did not formally reach the sufficiency of the pleading of alleged infringement. But by twice noting it, Judge Albright signaled that he will look extra carefully at the pleading of key facts that are left uncertain.
As to the second requirement, that Carlisle have a regular and established place of business, the court turned to a tripartite Federal Circuit test. A regular and established place of business must be (1) “a physical place in the district,” (2) “regular and established,” and (3) the “place of the defendant.” In re Cray, 871 F.3d 1355, 1360 (Fed. Cir. 2017). Failing to allege any of those. Instead, the court noted the admission that the defendant’s principal place of business was in Scottsdale, Arizona, with a place of business in the Northern District of Texas, and a Delaware incorporation.
The court rejected an alleged one-time demonstration of the product as sufficient to show a “regular and established place of business.” In other words, no bootstrapping a single alleged act of infringement into a showing that a defendant’s business is regular and established. Next, the court turned to the plaintiff’s attempt to hold venue via pendent trade secrets and contract claims. Following TC Heartland, the court held that 28 U.S.C. 1400(b) is the sole statute to control venue analysis in a patent case. As it failed to satisfy section 1400(b), Judge Albright dismissed the patent claim.
The trade secrets and contract claims fared no better. Judge Albright, following a Fifth Circuit unpublished case, ruled that venue must be satisfied for each claim. Moreover, contacts with the district had to be “substantial.” The court characterized “a meeting that is believed to have occurred” as too “paltry” to show “substantial contacts.” Those non-patent claims were dismissed also.
On March 8, 2021, Judge Albright granted Carlisle’s motion to dismiss for improper venue. Plaintiffs without venue facts may not stay in West Texas for the grand duel.